Districts best able to afford local taxes face biggest cuts

Thursday

Apr 28, 2011 at 12:01 AMApr 28, 2011 at 11:51 AM

As legislators look for ways to take some of the sting out of Gov. John Kasich's school-funding plan, a Dispatch analysis finds that the districts that would feel the deepest cuts are generally those where taxpayers are making the least effort to fund their schools.

As legislators look for ways to take some of the sting out of Gov. John Kasich's school-funding plan, a Dispatch analysis finds that the districts that would feel the deepest cuts are generally those where taxpayers are making the least effort to fund their schools.

Using Department of Education data that attempt to measure how much taxpayers give to their schools compared with their ability to pay, the computer analysis suggests that, on average, districts facing the biggest percentage cuts are also those where residents could most afford to pay more in local taxes.

Kasich's school-funding plan, which would cut $852million from schools over two years, leaves no district unscathed. But it is designed to protect poorer districts that rely more heavily on state funding to run their schools.

Taxpayers in districts making up the lowest quintile of what the state dubs "tax effort" are making just 63percent of the average state tax effort to fund their schools. The districts in that bottom 20 percent would see cuts averaging 14.5 percent under Kasich's two-year budget.

Meanwhile, districts in the top quintile, where taxpayer effort for schools is 43 percent above average, the overall two-year state cut averages 10.9 percent.

The figures do not include potential savings from shifting pension burdens to school employees or the use of leftover federal stimulus dollars for teachers.

Legislative Republicans across the state have received sharp criticism from some suburban districts that face the deep cuts, and they are expected to alter Kasich's school-funding plan today when they roll out a batch of budget changes.

Although the state's top public-education advocacy groups strongly disagree with Kasich's cuts, Howard Fleeter, an economist and analyst who does work for those groups through the Education Tax Policy Institute, said the latest data show that the governor's distribution formula is less deserving of criticism.

"If you look at it and say there are better and worse ways of dealing with a problem, you would say they have probably chosen a better way overall to deal with the problem," he said.

"That doesn't mean that places with more resources aren't suffering hardships. It just means, if you've got to pick different ways of distributing the pain, they have done something equitable."

The Department of Education developed the "tax-effort index" a few years ago in response to consistent questions about how much of a burden taxpayers are bearing to support their schools.

Department analysts say that, for the most part, the index is a true reflection of how much financial effort residents are making to support education. But they also warn that the calculation is by no means perfect: The formula is subjective, and the data have limitations.

The formula presumes that wealthier residents have a greater ability to pay. For example, if in two districts the percentage of median income paid to schools is identical, the formula would show that the tax effort is greater in the district where residents are poorer.

"If you've got to pass a 6-mill levy, having someone tell you it should be easier because you have the capacity may not make you feel better, but it is a legitimate way to look at it," Fleeter said.

For the 595 districts that would lose money during the next two years, making up those losses would require an average local levy of 3.6 mills. Millage amounts vary widely depending on how much state money districts rely on, and how much they can generate in local property taxes.

The New Albany-Plain schools, for example, would face a 41 percent cut in state funding over two years ($1.3 million) but could make that up with a 1.4-mill levy.

The Southern Local district in Perry County faces an 11 percent cut ($745,000) but would need a 16.6-mill levy.

Kasich has argued that schools should not have to raise local taxes, noting that for many wealthier districts, the state cuts are a small percentage of their total state and local revenue.

"The budget gives all districts, including high-wealth districts that see minimal impact, powerful savings tools to cope with the loss of federal stimulus funds and other funds," said Kasich spokesman Rob Nichols. "The governor challenges all schools to step up and make use of these tools so more funds can go to the classroom, and taxpayers can be spared new burdens."

The state's top education advocacy groups argue that avoiding levies is "simply impractical and flies in the face of reality."